Economics of Beauty: Beauty and the Social Market (Part 3)

We have previously discussed the measure of beauty (Part 1) in academics, and the trade of beauty and income (Part 2). Now we move on to the trade of beauty for non-pecuniary aspects of life. I will argue that we choose our friends and partners for several variables, one significant one being their looks. First I will present some evidence of beauty in friendships. Next, we will move on to an economic model of dating and marriage, as an exchange of numerous variables among partners, one of them being beauty. The theory predicts that the social market exhibits a fair trade of personal features, including beauty. So, what you deserve is what you get.

The anecdotal tales of the high school group formation is true. Beautiful high school footballers form a group, the hot cheerleaders are friends, and the ugly nerds do economics together, and the weird-looking goths do whatever they do, as a group. Numerous studies show that beauty is one of the main factors we chose our friends in school and college. Other factors are intelligence, athleticism, economic background, ethnicity, and religion. We stick to our kind. In most cases, our kind is defined by how similar we look. There is evidence that this is not only a high-school phenomenon. Non-students were asked to form groups to accomplish experimental tasks. Little did they know that the experimental task was arbitrary, while them choosing their partners was the important part. People who were better looking were more often chosen to be partners. How does that make sense? Why do we choose friends and partners based on their looks? Let's look at some economic models of dating…

Economic models are simplified versions of reality. The simplest version of dating life would be to assume that beauty is the only thing that matters when choosing a partner. Love would be pretty simple: Good looking people would trade their looks for getting with an equally good looking partner. This trade can be mimicked in a no-talking speed dating experiment. The rules are: Everyone can choose 3 people out of the 10 presented. If they also chose you, phone numbers will be exchanged. All of a sudden we see the invisible hand sorting the trade of different beauties. Ugly females don’t choose the hottest 3 males. They can see that their chances of getting a phone number are going to be very low. Ugly men also don’t go for the hottest chicks. They know what they bring to the table and chose women in their range. Thus a fair trade of beauty exchange is happening without any assistance. Adam Smith’s invisible hand, and the dating market with only one variable, beauty, arranged a fair and utility-maximizing exchange of people’s beauty. This concept is called assortative mating: choosing a partner that resembles yourself because this is a fair exchange of personal attributes.

“But Kruxi, beauty is not the most important thing in dating!” True. Intelligence might also be an important aspect. Let’s assume that we now do a speed dating round where you can quiz the other person for three minutes on a short math puzzle. In addition to beauty, this now introduces intelligence. As you have probably guessed, one’s own beauty can now be exchanged for someone else’s beauty OR someone else’s intelligence. These experimental results are pretty clear: men trade their intelligence (measured in SAT scores) for the looks of women. In these small experiments, it seems that the income prospect of males is traded for superior female genes. Nationally representative samples show similar results. Where beautiful women are together with wealthier men, indicating a trade between beauty and IQ.

Beauty and intelligence are not the only two aspects that can be traded. Humor, athleticism, chess abilities (…) are possible bargaining chips in a dating scenario. The economic model predicts that a finite amount of variables is traded among humans in friendship, dating, and marriage. One of those variables is beauty. Adam Smith’s invisible hand predicts that demand and supply will meet at equilibrium: You will be able to trade off your features (including your beauty) with someone else’s features, equivocal in weight, thus fair. You might be more beautiful, but the other person will compensate for it with their intelligence (i.e.). In theory, every partnership is a fair trade of features, given information symmetry and friction-less dating markets (which arguable they are not: people can prop themselves up or hide uncomfortable aspects. And the dating/marriage market is not friction-less: splits and divorces are expensive (see Marriage as a Commitment Device), sunk cost fallacy kicks in, and searching and switching costs are substantial). Never the less, it might be worth writing down 5 features of you and your partner, rank them and see if you get a similar number. Seeed put it best: “What you deserve is what you get, you want to know now, but you don’t know it yet!”

A piece of advice to my economics loving friends: Don’t use this theory when consoling a friend that was just broken up with. I remember my female friend crying and saying: “He is such a dick. I deserve so much better.” I couldn’t help it. I rushed in explaining that probably the opposite is true. “There might have been a time where the exchange was equal between you two, but now that he broke up with you it seems that he has more to offer than you in the dating market. Thus, if he broke up, chances are, he deserves better.” That was the last time she called me for love advice.

Once again: Evidence can be found in Dan Hamermesh’s book Beauty Pays. If you want to know any specific references to the studies mentioned above send me a message.